In this recent case, an Oregon-based life insurance company denied death benefit claims, citing incomplete paperwork as the reason. The insurer claimed that missing medical history documentation meant the policies were never fully valid. Although the State of New Mexico ultimately provided $55,000 to each family out of its own budget, the insurer’s refusal to pay has led to widespread criticism and may result in the termination of the state’s contract with the company. If you need life insurance claim help in South Dakota we are here for you.
The Heart of the Dispute: Missing Medical History Forms
When the families of two deceased state employees filed for life insurance death benefits, they expected the process to be routine. After all, their loved ones had been employed by the state and enrolled in life insurance coverage through a group policy. However, the insurer denied both claims on the basis that key documents—specifically, medical history forms required during the application process—were missing from the files.
These forms are typically used by insurers to assess risk and determine whether additional underwriting is required. In some policies, particularly those involving supplemental life insurance or amounts over a guaranteed issue threshold, medical history forms can be essential to final approval. Without them, insurers may claim the application was incomplete, the coverage was never fully activated, and thus the death benefit is not payable.
State of New Mexico Intervenes to Compensate Families
Recognizing the impact on the families and the reputational damage caused by the denials, the New Mexico General Services Department (GSD) stepped in. GSD issued $55,000 in compensation to each affected family, effectively acknowledging the employees' expected coverage even if the insurer refused to honor the contract. While this provided some financial relief, the state also began reviewing thousands of other employee files to determine whether similar documentation gaps exist—and whether future claims could be at risk.
This move signaled a lack of confidence in the insurer’s claims handling practices and may lead to the cancellation of the company’s contract with the state.
What This Case Reveals About Life Insurance Denials
This situation reveals several important truths about life insurance—and why families need to be vigilant:
Paperwork Problems Are a Leading Cause of Claim Denials: Incomplete or missing documents are frequently cited by insurers as justification for refusing to pay. Even a single missing form can jeopardize a large death benefit.
Medical History Forms Can Be Gatekeepers to Coverage: Particularly in group or employer-sponsored plans, policies may have both guaranteed and underwritten options. If an employee selects higher coverage without completing the necessary forms, the insurer may deny the claim later.
Beneficiaries May Be Unaware of Gaps in Coverage: Many employees assume their coverage is active simply because premiums are deducted from their paycheck. But if underwriting is incomplete, the actual issuance of the policy may be contested.
Employers and Government Agencies Can Step In—but Don’t Always Do So: In this case, New Mexico stepped in to help, but private employers or smaller institutions may not have the resources or willingness to resolve the issue when insurers refuse to pay.
Legal and Policy Ramifications of Denied Claims Like These
Denied claims based on administrative errors or missing forms raise serious questions about insurer obligations, employer oversight, and beneficiary protections. Key legal issues include:
Bad Faith Denial: If the insurer accepted premiums without completing its own underwriting review, it may be liable for bad faith conduct or breach of contract.
Employer Responsibility: Employers who administer group life insurance plans may be legally responsible for ensuring that enrollment forms and medical history documents are submitted properly.
ERISA Considerations: If the policy is governed by the Employee Retirement Income Security Act (ERISA), claimants may have specific appeal rights and legal protections against wrongful denial.
FAQ: Denied Life Insurance Claims Due to Missing Medical Forms
Why would a life insurance claim be denied due to missing paperwork?
Insurers may argue that incomplete applications—especially missing medical history forms—mean the policy was never fully in force. This allows them to avoid paying claims even when premiums were accepted.
What is a medical history form and why is it important?
It’s a document required for underwriting when applying for certain levels of life insurance coverage. It helps insurers assess risk. If this form is not submitted, the insurer may claim the policy was never valid.
Can an employer be held responsible for missing paperwork?
Yes. If the life insurance policy was offered through an employer, and the employer failed to submit required documentation, they may be liable for damages or benefits owed.
What if premiums were deducted from paychecks—doesn’t that mean the policy is active?
Not necessarily. While premium deductions are evidence of intent to obtain coverage, insurers can still argue that the policy was contingent on receiving a completed medical form or approval from underwriting.
How can I prove that coverage was in force despite missing documents?
You may be able to argue that the insurer waived its right to deny coverage by accepting premiums or that it failed to fulfill its obligation to finalize underwriting in a timely manner.
Is this type of denial legal under ERISA?
ERISA requires insurers to act in the best interest of plan participants and beneficiaries. Denying a claim based on missing paperwork—especially if the insurer never followed up—could violate ERISA.
Can I still get paid if the insurer denies the claim?
Possibly. Many claims are reversed on appeal or through litigation. In some cases, other parties—like the employer—may step in to provide compensation.
How much time do I have to appeal a denied claim?
Deadlines vary by policy and whether ERISA applies, but typically you must appeal within 60 to 180 days of receiving the denial.